The new BPO payment term

Transcription

1 The new BPO payment term Extending Supply Chain Finance to the PO level André Casterman Head of Corporate and Supply Chain Markets, SWIFT Member of the ing Executive Committee, ICC Co-Chair Obligation Project, ICC EPCA, Brussels, 22 March 2013

2 Today s SCF offerings start when Supply Chains are over Extended SCF opportunity Current SCF scope Ordering Production Delivery Invoice Goods Acceptance Initiation Purchase Order Certificates Transport Invoice Issuance Invoice Approval Higher risk assurance & financing services Low risk No risk (Early) services 2

3 Trade contract Today s SCF offerings are offered within closed models 3-corner closed model 4-corner interoperable model Too many portals! Trade contract s s Industry Standards works with own bank s Multi-bank standards s 3

4 Introducing a new payment term for corporates BPO is a new payment term in the ICC Int l Sales Model Contract LC Established B2B practices BPO OA Purchase Orders Transport docs Certificates Invoices C2B contracts facilitating the provision of risk & financing services UR BPO rules govern an irrevocable and conditional electronic inter-bank payment obligation s' ICC SWIFT 's An industry-wide transaction matching platform that implements the BPO using ISO A legally binding rulebook owned by the ICC and based on ISO standards 4

5 The Obligation (BPO) A BPO is an irrevocable undertaking given by a bank to another bank that payment will be made on a specified date after successful electronic matching of data according to an industry-wide set of rules. ICC Uniform Rules for Obligations Therefore, a BPO offers: An assurance of payment Risk mitigation for all parties Possible use as collateral for finance An alternative instrument for trade settlement 5

6 Industry standards Developed by international standardisation bodies Trade Finance instruments (E.g. UCP 600, URDG 758, ISP98, URC 522, URBPO) MT standards (for L/Cs, Demand Guarantees, Collections) ISO standards (for BPO) Industry standards are industry-owned and technology-neutral. They offer a dependable legal and operational framework. 6

7 Advice Data Data BPO combines the best of both worlds Contract Contract Contract Application Letter of Credit Obligation Open Account LC Issuing Issuance LC Advising Obligor Data Recipient s s services based on paper document processing services based on electronic trade data exchange services limited to payment processing Array of risk, financing and processing services to address both cash management and trade finance needs 7

8 New accelerated and dematerialised bank services Ordering Production Delivery Invoicing Goods & Acceptance cash mgmt Purchase Order (PO) Certificates Transport Invoice Issuance Invoice Approval risk mitigation Pre-shipment finance Post-shipment finance Early payment processing Transforming open account payments into SCF opportunities 8

9 The BPO builds upon electronic data matching Matching of contract data BPO is established A 1) Sign contract (PO) 2) PO data 3) SO data TSU 4) Match PO/SO data & confirm B Matching of data A 5) Datasets TSU 6) Match requested datasets & confirm 5) Datasets B BPO is due Transfer of funds A 7) Debit buyer FIN 9) Pay seller B Trade is settled 8) Transfer funds PO= Purchase Order; SO= Sales Order 9

10 Live BPO banks s with live transactions + 1 corporate case study Live s Region Intra / Interbank transations Locations of live corporate supply chains Corporate case study of China APAC Intra in China Inter CN Ito Yokado s Chinese suppliers of Tokyo Mitsubishi UFJ APAC Intra Inter JP, HK, CN, TW Ito Yokado Korea Exchange Standard Chartered Siam Commercial APAC Inter KR Automotive industry (in development) EMEA Intra BE, OM BP Chemicals Octal Plastics APAC Inter TH PTT Polymer Marketing Co (in development) 10

11 Thank you To contact SWIFT's Trade and Supply Chain team, send us an at Join our LinkedIn group Supply Chain on SWIFT 11